New inflation data may provide insight following holiday discounts and the government shutdown that contributed to lower prices

Inflation Update: December 2025 Report

A customer examines a promotional sign at a supermarket in West Milton, Ohio, October. (Kyle Grillot / Bloomberg via Getty Images)

The last inflation data for 2025 is set to be released on Tuesday morning, wrapping up a year where inflation slowed its pace but overall prices remained elevated.

Experts anticipate that inflation continued to climb in December, highlighting the ongoing affordability issues many consumers have reported in recent months.

Following a combined report for October and November that revealed a 0.2% increase in inflation, economists are now predicting a 0.3% rise from November to December.

On a yearly basis, inflation is expected to remain at 2.7%, consistent with the previous report.

UBS analysts forecast that December could see the largest monthly inflation jump since January 2025, with core inflation—which excludes the more volatile food and energy sectors—likely increasing by 0.44%.

According to UBS, shoppers probably noticed a significant uptick in grocery prices during December.

“Prices for food at home are expected to show a notable rise,” the analysts noted. “Egg prices have stabilized, while items like ham and fresh fruit are experiencing increases.”

The Trump administration is continuing to introduce policies aimed at reducing the cost of everyday necessities.

With the upcoming election year, these efforts have taken on added urgency, as some lawmakers will soon face primary challenges.

In recent days, President Donald Trump has called on oil companies to invest in and export Venezuelan oil to help lower gasoline prices. He has also authorized $200 billion in mortgage bond purchases to bring down home loan rates and directed credit card companies to cap interest rates at 10% for one year.

The administration’s emphasis on lowering costs has kept interest rates at the forefront of economic discussions, with Trump repeatedly urging the Federal Reserve to cut rates.

On Sunday, the announcement of a Justice Department criminal probe into the Federal Reserve sent shockwaves through both Wall Street and Washington, raising concerns about the central bank’s independence from political influence.

This investigation comes just before the Fed’s next policy meeting, where officials are widely expected to keep interest rates unchanged.

Lower interest rates can help boost the economy by making it easier for consumers to finance major purchases and for businesses to access loans for expansion.

Expert Perspectives and Additional Insights

According to Bank of America economists, “The Fed remains more focused on employment trends than on inflation at this time.”

Citigroup analysts noted that Tuesday’s inflation report may reflect “some distortions” due to the unusually long government shutdown at the end of last year.

“Inflation continues to pose challenges,” wrote Seema Shah of Principal Asset Management in a client note.

Shah also observed that since President Trump imposed broad tariffs on his so-called “Liberation Day” in April 2025, prices for imported goods have climbed 3%, with domestic goods seeing similar increases. However, she added that the extent to which these price hikes have been passed on to consumers has been “limited.”

Not all analysts agree that inflation will only rise by 0.3%. JPMorgan experts believe that inflation rates from September through November were artificially suppressed by the government shutdown and the timing of late-November holiday sales.

“The December data should correct for some of these anomalies, likely resulting in a stronger month-over-month increase,” they wrote.